Hank Paulson, you can't buck the market

I hate to disagree with the great Ambrose-Evans Pritchard, who has written some enormously eloquent pieces in favour of state intervention to anticipate a financial collapse. Ambrose is a Telegraph legend. During a previous crash, the leader-writers were wandering about with long faces, pondering the decline in their fortunes, when they noticed that the sub-editors seemed unwontedly cheerful. "What are you lot so bloody happy about?" asked the comment editor. "Oh, we saw this coming: we've been subbing Ambrose's copy". So when Ambrose says that Hank Pauslon has averted a slump, we must take him very seriously.

Still, I can't help feeling uneasy about the whole business. If I had to distil my disquiet into a single sentence, I would quote this one from Gaetano Salvemini, complaining about Mussolini's fascist economics in 1936 (hat tip, Devil's Kitchen): "The State pays for the blunders of private enterprise… Profit is private and individual. Loss is public and social."

I'd say that pretty well sums it up. The Left is rampant now, claiming that capitalism has collapsed under the weight of its own contradictions. In fact, what we have seen is the failure of state intervention. Interest rates were kept too low for too long, in Europe, Japan and the US. That was a political decision, not a market one. As recently as this year, Congress had been pushing Fannie and Freddie to assume greater liabilities. Maybe Ambrose is right that the state now has a duty to rescue its own victims. But, if too much government was the problem, how can more government be the solution?